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Lansing — In an effort to lower Detroit's high auto insurance rates, one state lawmaker wants to let insurers sell basic auto coverage in Detroit with just $50,000 in medical coverage.

State Sen. Virgil Smith, D-Detroit, said if city residents are willing to forgo unlimited lifetime medical benefits for auto accidents, it could drive down the cost of insuring vehicles in Michigan's largest city.

Smith's bill would allow insurance companies to sell plans with a $50,000 in maximum lifetime medical benefits to Detroit motorists who are at least 21 years old, have a good driving record and own a car worth less than $20,000.

They also would be restricted to having an income of less than 300 percent of the poverty level or about $35,000 a year. The "low cost" insurance coverage would be limited to drivers and not cover passengers, Smith said.

Drivers in Detroit's 48227 ZIP code pay the highest auto insurance premiums in the country for a 2014 Honda Accord at $5,109 per year, 130 percent more than the statewide average for that particular vehicle, according to a January study of average rates by CarInsurance.com.

Estimates vary, but as much as half of all Detroiters drive without auto insurance.

"The idea is to try to get a policy that's affordable to get more people into the actual insurance pool," Smith said Tuesday.

Smith's bill could soon gain steam in the Republican-dominated Senate after that chamber passed a wider-reaching auto insurance reform bill last week that would impose caps on the cost of medical care for which insurance companies have to pay. The House Insurance Committee began hearings Tuesday on the auto insurance bills.

Sen. Joe Hune, chairman of the Senate Insurance Committee, is co-sponsoring Smith's bill, which will be formally introduced Wednesday.

Lawmakers have long sought to rein in Michigan's limitless medical benefits for auto accident victims, but changes to the system have been stopped by a powerful lobbying counterpunch from hospitals and brain injury treatment centers. New York has the next highest coverage in the nation with a $50,000 lifetime coverage cap for auto injuries.

"It begins to address the problem," said Peter Kuhnmuench, executive director of the Insurance Institute of Michigan, an industry group that supports Smith's legislation. "We're way outside the realm of everybody else."

Josh Hovey, spokesman for the Coalition Protecting Auto No Fault, said Smith's bill could bankrupt families of children injured in car accidents and force them onto the Medicaid insurance program for the poor.

"For someone in a serious auto accident, $50,000 will barely cover a few days in the hospital," said Hovey, whose group represents hospitals and medical providers. "The only way this bill would work is if accident victims were able to choose their level of injury."

Gov. Rick Snyder said last week he is working with Detroit Mayor Mike Duggan on a separate plan for driving down the cost of insuring a car in Detroit.

Duggan's office said Tuesday the mayor has not settled on a preferred plan.

"The mayor's administration has been circulating ideas and gathering input from legislators on possible solutions to the high auto insurance rates paid by Detroiters, but no final recommendations are being made at this point," Duggan spokesman John Roach said.

clivengood@detroitnews.com

(517) 371-3660

Twitter.com/ChadLivengood

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